Xperi Signs Tier 2 TV Maker as First TiVo OS Licensee

TiVo signed its first smart TV customer for TiVo OS, said Xperi CEO Jon Kirchner on a Q2 earnings call Monday. TiVo OS is Xperi's embedded operating system and media platform for smart TVs.

Kirchner said the OEM is a tier 2 company that supports multiple brands. The deal shows the company’s “early progress toward our goal of becoming a leading independent TV OS platform supplier,” he said. Xperi is targeting tier 2 brands, “and some tier 1s,” that are looking for an open-end smart TV platform with “flexibility to customize their own user experience,” have a direct-to-consumer relationship, and “participate in monetization over the long-term.”

TV brands will be able to customize their experience in a “powered by TiVo way,” Kirchner said. The company will provide the Linux-based OS and the media platform, the user interface and related ad-based monetization, he said, claiming a “best-in-class UX experience, great personalized content and discovery.” The monetization platform, “as we move downstream,” will generate “meaningful revenue, not only for us, but for the TV manufacturer,” he said.

Kirchner said 40% of global TV OEMs are looking for an independent smart TV platform, based on “the composition of the broader TV market” and discussions with tier 2 brands. The company is targeting companies looking for “an OEM-branded experience powered by TiVo,” but that are “not necessarily looking for a TiVo TV,” he said. He sees an available market of “tens of millions of units.”

On how TiVo’s model is different from others, Kirchner said, “We’re content-agnostic. We're not trying to entirely control the direct-to-consumer relationship,” he said: “That’s for the people who make the equipment." The company is “not in many ways trying to mirror the models that exist out there with others.” TiVo OS strengths are in technology, business model and independence, he said. There are some TV brands that “don't want to cast … their futures, in ways, with others who may be more inclined to usurp that experience entirely.” That's particularly true for the customer relationship “and/or the monetization of it.”

Xperi previously said it expected the first TiVo OS-powered TVs to hit the market in late ’23 or ’24, but Kirchner moved up the time frame Monday to mid-2023. The TiVo OS TVs will be sold outside North America, he said, saying more information will be made available this fall.

In Q2, Xperi renewed a “significant” long-term license agreement with a leading consumer electronics and OTT service provider, covering both the media and [semiconductor] IP portfolios,” Kirchner said. The renewal, on “attractive terms," shows the underlying growth in the OTT market, said Adeia CEO Paul Davis, who said the Adeia IP portfolio is nearly 10,000 patents. Xperi is still on track to spin out Adeia as a separate IP company later this year.

Supply constraints continue in Xperi’s Connected Car segment, Kirchner said. Improvement is “on the horizon, just not as fast as we’d like to see,” he said. Xperi expects 2022 car sales to be down vs. 2021 based on IHS forecasts, with recovery and growth coming in 2023 “as supply chain issues get resolved.”

The company renewed a multiyear license with TCL, expanding deployment of DTS:X and Imax Enhanced. New titles with Imax Enhanced include Doctor Strange in the Multiverse of Madness in June on Disney+; this fall, more titles will be released, including Lightyear, the first Imax Enhanced animated film which began streaming last week, the company said.

Xperi bought Vewd Software Holdings in Q2, saying its streaming platform technologies will help scale TiVo OS globally for connected TVs. Norway's Vewd also has offices in Sweden, Poland and Taiwan. The Vewd for Automotive in-vehicle content aggregation and streaming platform was integrated on Renesas chipsets for automotive OEMS wanting to bring streaming to the car. Over 450 million connected TV devices have shipped with Vewd Smart TV, whose licensees include Amazon, CommScope, Hisense, Sony, TCL and Vestel, it said.

Vewd is expected to add $10 million in incremental revenue to Xperi’s revenue this year. The company raised its full-year outlook at the low end by $10 million, bringing the revenue guidance to $930 million-$960 for 2022. Shares closed 2.7% lower Tuesday at $15.97.

Revenue in Xperi’s product business was $126 million, up 5% from $120 million in the year ago period, primarily attributable to the resolution of a longstanding contract dispute with a mobile imaging customer, said Chief Financial Officer Robert Andersen. Supply chain issues and the impact of inflation on consumer demand persist, particularly within the Connected Car and CE categories, Andersen said.

The Pay-TV product category, which was 48% of total product revenue in the quarter, generated $60 million in Q2, down $6.8 million year on year due to a one-time metadata deal that occurred in the year-ago quarter, along with churn in the classic guides business, Andersen said. CE’s $39 million Q2 revenue was 31% of total product revenue, up $16.8 million vs. Q2 ’21 due to the mobile imaging contract resolution. Xperi expects growth overall in CE for the year.